COMMON ENERGY MARKET –
INTERCONNECTORS
26.03.2014
Filip Černoch
FSS MU
Drivers of investment
 Development of
common energy market
(+ security reasons)
 Development of
renewables
 Binding targets – 20 % of
RES by 2020
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Common market and energy lines
„Despite… Directive 2009/72/EC … and Directive 2009/73/EC …the market remains
fragmented due to insufficient interconnections between national energy networks and to the
suboptimal utilisation of existing energy infrastructure. However, Union-wide integrated neworks
and deployment of smart grids are vital for ensuring a competitive and properly functioning
integrated market, optimal utilisation of energy infrastructure, increased energy efficiency …“
Regulation 347/2009
 Art. 194 TFEU:
 1) Ensuring the function of the energy market
 2) Ensurign security of supply in the Union
 3) Promoting energy efficiency and energy saving and the development of
new and renewable forms of energy
 4) Promoting the interconnection of energy networks
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Estimated investments (2010 – 2020)
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1) Electricity sector – TYNDP (2010) stipulates about 70 bn. euro for
transmission infrastructure, of which 28 bn. euro to be devoted to cross border
interconnections.
2) Gas sector – 28 bn. euro for import pipelines, 21 bn. for intra-EU
interconnectors.
3) CO2 pipelines
infrastructure – 2,5 bn.
Euro.
Investments - challenges
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2 problems:
Financing
Permition and administration procedures (incl. local opposition)
And the rising role of the EU in dealing with them.
EU financing
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Economically viable – economically non-viable interconnectors (esp. cross-border
– case of CZ/PL gas pipeline)
TSO´s own equity financing complemented by loans from commercial banks and
international financial institutions (EIB etc.)
Advantage of domestic transmission and distribution over crossborder
interconnectors or multiple-country cross-continental pipeline projects.
= role of the EU in the economicaly non-viable coross-border interconnectors
EU financing
 TRANS-EUROPEAN ENERGY NETWORK – TEN-E
 Since 90s, enhanced in 2006 by Decision 1364/2006/EC.
 Limited budget of about 22 million euro annually, with a total of 155
million euro for the period 2007-2013.
 Too many candidates for too small an amount of funding.
 Support mainly to feasibility studies and studies related to the project (up
to 50 % of costs). The project itself only up to 10 %.
 Mainy gas and electricity sector.
 Inclusion of a given project in TEN-E means the chance to gain
resources from other EU instruments (EIB, structural funds, Instrument
of Pre-accession Assistance EIA, European Neighbourhood Policy, RTD
Framework programs).
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.
EU Financing -EIB
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.
Major source of EU infrastructure
financing
Plays an important role in facilitating
the implementation of the TEN-E – in
2007-2009 up to 6 bn. euro (3,4 bn.
natural gas, 2,6 bn. electricity).
In addition to the conventional loan
financing also Trans-European
Network Investment Facility – for
priority TEN projects (0,5 – 1 bn. euro
per year for energy)
Structured Finance Facility – since
2001, high-risk profile projects.
Infrastructure Equity Fund, JESSICA,
JASPERS…
EU financing
 The European Economic Recovery Plan
 A special one-time impetus aimed at boosting EU economies (due to the financial
crisis 2008) through a combination of short-term measures to stimulate demand
and long-term investments in strategic sectors.
 Regulation 663/2009, aim was to co-finance projects in energy infrastructure,
offshore wind energy and CCS. Rapid allocation,96,3 % (3,8 bn. euro out of 3,9
bn.total) by the end of 2010 in the form of commitments to 59 projects.
 44 gas and electricity projects, 9 offshore wind farms and 6 CCS.
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18 gas infrastructure
projects= 1,440 million
Central and South East
Europe = 310 million
EERP
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Protracted permit granting procedures
 Difficult and time consuming procedures
 Public opposition
 ENTSO-E = new power generation equivalent to 1/3 of present capacity will be
built in the EU (220 out of 250 GW net increase from RES). 100 grid bottlenecks are
expected to the end of the decade .
 53300km of new and upgraded high-voltage routes (104 bn.euro) needed. 1/3 of
those investments are being delayed „…mostly because of social resistance and longer than
initially expected permitting procedures…they are lengthy and often cause commmissioning
delays…it is of utmost importance to smooth the authorisation processes“.
 GB: a 2005 proposal to expand a 200km transmission line carrying wind power
across Scottish mountains to south cities attracted 20 244 objections. (approval in
2010).
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Energy Infrastructure Package
 2011, with the aim to speed up and complete EU transmission
infrastructure (strategic energy networks and strage facilities) by 2020.
 Regulation No 347/2013 on guidelines for trans-European energy
infrastructure
 12 priority corridors and areas covering electricity, gas, oil and carbon dioide transport
networks.
 Projects of Common Interests (PCIs) – label for the projects contributing to implementing
these priorities. Projects displaying economic, social and environmental viability, with at least
2 MS.
 Streamlining of bureaucracy and permitting procedures to reduce their duration for PCI,
increase public participation and acceptance of the implemantation of such projects.
Facilitating the regulatory treatment of PCI, providing market-based and direct EU financial
support.
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Energy Infrastructure Package
 In the field of energy the amount of EU financial support shouldn´t
exceed 50 % of the eligible cost of studies and/or works. Co-financin
rates may be increased to a maximum of 80 % for actions with a high
degree of regional or EU-wide security of supply or strenghten solidarity
of the EU or comprise highly innovative solutions.
 Co-financing rates may be increased by up to 10 % for actions having
cross-sector synergies, reaching climate mitigation objectives, enhancing
climate resilience or reducing the greenhouse gas emissions.
 Source: CRPM
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Energy Infrastructure Package
 The following financial instruments may be used:
 (a) equity instruments, such as investment funds with a focus on
providing risk capital for actions contributing to projects of common
interest;
 (b) loans and/or guarantees facilitated by risk sharing instruments,
including sharing enhancement mechanism to project bonds, issued by a
financial institution on its own resources with a Union contribution to
the provisioning and/or capital allocation;
 (c) any other financial instruments.
 Source: CRPM
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Energy Infrastructure Package
Connecting Europe Facility
 Plan to invest 50 bn. euro (9,12 and then 5,1 bn. euro to energy
infrastructure).
 Providing the financial resources for the PCI.
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Energy Corridors
 In the electricity sector four EU priority corridors are identified:
 An offshore grid in the Northern Seas and connection to Northern and Central
Europe to transport power produced by offshore wind parks to consumers in big cities and
to store power in the hydro electric power plants in the Alps and the Nordic countries.
 Interconnections in South Western Europe to transport power generated from wind,
solar, hydro to the rest of the continent.
 Connections in Central Eastern und South Eastern Europe, strengthening the regional
network.
 Integration of the Baltic Energy Market into the European market.
 In the gas sector, three EU priority corridors are identified:
 Southern Corridor to deliver gas directly from the Caspian sea to Europe to diversify gas
sources.
 Baltic Energy Market Integration and connection to Central and South East Europe
 North-South corridor in Western Europe to remove internal bottlenecks and enable best
use of possible external supplies.

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Energy Corridors
 Priority Oil Corridor
 Oil supply connections in Central Eastern Europe ("OSC")
 3 priority thematic areas
 Smart grids deployment: adoption of smart grid technologies across the Union to
 efficiently integrate the behaviour and actions of all users connected to the
electricity network, in particular the generation of large amounts of electricity
from renewable or distributed energy sources and demand response by
consumers;
 Electricity highways: first electricity highways by 2020, in view of building an
electricity highways system across the Union;
 Cross-border carbon dioxide network: development of carbon dioxide transport
 infrastructure between Member States and with neighbouring third countries in
view of the deployment of carbon dioxide capture and storage.
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PCIs
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PCIs
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PCIs
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PCIs
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PCIs
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